One of the first steps to dealing with mortgage difficulties is understanding that you are not alone. There is help available out there for every body- regardless of your circumstances.

Asking for help can take the pressure off you and dramatically increase the chances of saving your home.

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Before you start

Take a good look at what you are spending money on and ask yourself a few important questions:

• Can I cut back on my spending without having to struggle?
• Can I get a better deal on my mortgage?
• Am I behind on any other loans secured against my home?
• Can I change the way I am paying other debts that are not a priority?
• Would an agreed 'payment holiday' or changing to 'interest only' payments help me to pay my mortgage?
• Is my home worth more or less than the amount I borrowed to buy it?
• Do I have mortgage payment protection insurance (MPPI) that I can make a claim on?
• Am I claiming all the benefits I'm entitled to?
• If I am claiming benefits, can I get help paying my mortgage through 'Support for Mortgage Interest'?

If you don't know the answers to these questions about your spending it might be helpful to do a budget plan to work our how much money you are spending and what you can afford. The site Moneymadeclear offers a good online budget planner from the Financial Services Authority.

 
 
Coming to an agreement with your lender

Talking to your lender when you are having difficulties is a big step and it can be daunting. But it's really important that you talk to them as soon as possible. They are more sympathetic than most people expect and should be willing to help. Most importantly, it's never too late to talk to them. Here are a few helpful tips:

• Mortgage lenders should only take possession action as a last resort and there are a range of ways lenders can help you manage your monthly payments better


• Your lender should think about what they can do to prevent you losing your home. For example, they may:
   
  • Agree to change the terms of your loan
  
  
  • Accept reduced payments from you in the short term
  
  
  • Add your arrears to the amount you have borrowed


• They can also:
   
  • Reduce your monthly payment for a certain period or cut what they charge you for being in debt with your mortgage
  
  
  • Extend the time of your loan (which reduces the amount of your monthly payments, although you will be making payments over a longer period, and so paying more for your home)


• Continue to make payments that you know you can afford (even if it isn't the full amount) and tell your lender why you are only able to afford this much. This shows them you are willing to make an effort to pay and increases your chance of keeping your home


• If you are unhappy with how your lender has been dealing with you, or you think your lender is ignoring these rules, you can complain to the Financial Ombudsman Service (FOS). You can contact FOS through their website at www.financial-ombudsman.org.uk or by phoning 0845 080 1800.

 
 
Get free and independent debt advice

There is an overwhelming number of organisations and people out there offering advice and choosing who to go to can be difficult.

But remember many independent financial advisers may charge you for their services so always check first. The best thing to do is to contact or visit one of the following free and independent advice agencies.

• Citizens Advice Bureau
  The Citizens Advice Bureau helps you to deal with any legal, money, welfare benefit issues or other problems. To speak to someone face-to-face visit your nearest citizens advice bureau (details at www.citizensadvice.org.uk)


• National Debt Line
  National Debt Line is an independent charity that helps you to deal with debt problems. Phone 0808 808 4000 or visit www.nationaldebtline.co.uk


• Shelter
  Shelter is a charity that offers you help with housing, mortgage debt or problems with welfare benefits. Phone the free mortgage helpline on 0300 3300515 from 8am to 8pm Monday to Friday (incl Bank Holidays) and 8am to 5pm on Saturdays to Sundays (some mobile phone networks may charge for calls to this number). Or, you can visit www.shelter.org.uk/adviceonline


• Payplan
  Payplan gives you free and confidential advice on how to manage your debts. Phone 0800 917 7823 or visit www.payplan.com


• Consumer Credit Counselling Service
  The CCCS is a registered charity offering free, confidential advice and support to anyone worried about debt. Phone 0800 138 1111 or visit www.cccs.co.uk
   
  When you go to see an adviser it will be really helpful and save time if you take all the relevant information on this checklist with you. 
   
  If you're feeling overwhelmed and stressed because of your mortgage, debt or financial problems, the NHS has launched a Credit Crunch stressline on 0300 123 2000 where you can discuss with an expert the issues that are affecting you and your family.

And remember, it's never too late to get help and advice - you can get help even if your case goes to court. Everyone is eligible for support from a free court desk adviser and access to the service is available across the country. You should always go to a repossession court hearing.

 
 
Money advice checklist

To enable a money adviser to compile a budget, and to establish the exact amount of your debts, you need to bring the information below with you. Not all items listed below may be relevant to you. If you don't have some of the items it's fine to estimate them.

• Wage/pay slips
• Benefit/pension award letter or book
• Full details of your mortgage(s) - account number, statements, lender's name, outstanding balance, interest rate, current monthly payment
• Any correspondence from the lender to show whether any alternative hardship tools have been applied for or considered previously
• Council tax bill
• Water bill
• Fuel bills (for example gas, electricity, wood, Liquid Petroleum Gas and coal)
• Inland Revenue and National Insurance Bills
• Bank statements including details of loans and overdrafts
• Telephone (landline and mobile) and Internet bills
• TV rental and satellite costs and rental of any other goods
• All court papers
• Credit card details and correspondence, hire purchase and loan details and correspondence
• Car expenses/travel costs/schools meals

Also, think about the cost of housekeeping, other essential items and leisure costs.

 
 
Get help from government schemes

You may be eligible for help through one of these three government schemes. Please ask your lender about them, or mention them when you are speaking to an independent adviser. Alternatively you can find out more about Support for Mortgage Interest at your local Jobcentre Plus or housing benefit office.

• Mortgage Rescue Scheme
  If you're facing repossession, want to stay in your home, but can't meet your mortgage payments you may be able to use the Mortgage Rescue Scheme


• Homeowners Mortgage Scheme
  If your income has dropped but you expect your problems to be temporary, your lender might agree to enter you into the Homeowners Mortgage Support Scheme


• Support for Mortgage Interest
  If you are unemployed or work fewer than 16 hours a week, you might be eligible for Support for Mortgage Interest

 
 
If you're going to court

Remember, it's never too late to prevent your home from being repossessed. Even at the latest stages, go to court and try to agree a solution with your lender. There's lots of information about this on Directgov, but below are some important and helpful tips.

• Mortgage lenders should only take possession action as a last resort
  There is a new Pre-Action Protocol which means that lenders should prove they have considered all other options before trying to repossess a property. If your home is up for sale and you are doing everything you can to sell it, your lender should delay taking any action and should give you good time to sell your home


• You can get free help even if your case goes to court
  Everyone is eligible for support from a free court desk adviser and access to the service is available across the country


• You should always attend a repossession court hearing
  The court will want to see that you losing your home is a last resort and that other options were looked into first. Your lender will need to show they have followed the Pre-Action Protocol at any court hearing


• You can get free help even if your case goes to court
  A large number of courts will have a duty desk scheme – this means that there will be an adviser who can talk to you about the hearing, may go into court with you and speak on your behalf and then be able to explain what has happened in the court and what the next steps are. Everyone is eligible for this support. You can search for the address of your local county court and to find out whether that court has a duty desk scheme to advise/represent you on the National Homelessness Advice Service website.

 
 
Sale-and-rent-back schemes

Some companies may offer to help you with financial difficulties by buying your home and then renting it back to you for a fixed period of time (six months or more). These are sometimes called flash sales because they can buy your home quickly- sometimes within a week, but more often three to four. You may also hear them called mortgage rescue, rent-back or sell-to-let schemes.

The FSA regulates the sale of these schemes. Make sure you deal with a regulated firm so you will have access to complaints procedures if things go wrong. To check if a firm is regulated or to report an unregulated firm, contact the FSA. You should also contact the FSA to report any advertising of these schemes that you think may be unfair, unclear or misleading- see the FSA's information on financial advertising and how to report an advert.

Sale-and-rent-back schemes are not the same as a home reversion scheme which is for people who have paid off their mortgage and want to sell part or all of their home for cash and keep the right to live in it for a nominal rent.

Selling your home in this way may allow you to clear your mortgage debts and stay in your home, but you will no longer own it. Watch out as:

• you will normally be paid less than the full market value of your home;


• you should check how long you can stay in your home as your rental agreement may not be renewed, so you could still have to leave after the initial term (normally 6-12 months) comes to an end;


• you could still be evicted if you breach any of the terms of your tenancy, for example if you fall behind with your new rental payments; and


• if the person or firm buying your home gets into financial difficulties, the property could still be repossessed and you might have to leave.

Before you enter into a sale-and-rent-back scheme take time to consider whether you have any other options. For example, you can:

• speak to your mortgage lender. They may be able to help you to come to an arrangement about repaying mortgage arrears;


• speak to your other creditors. You may be able to arrange a repayment plan;


• check whether your local council offers a ‘mortgage rescue' scheme where they buy your home and allow you to rent it back;


• check whether equity release is a suitable option (this depends on your age). See the FSA's information on equity release;


• shop around to compare deals; and


• consider whether you might be better off selling your home on the open market.

So think carefully before entering into such a scheme and make sure you understand the consequences. For a guide on how it may affect your right to Housing Benefit, read the Advice for homeowners- sale and rent back leaflet from the Department for Work and Pensions (DWP). If you're unsure, talk to a free and independent money adviser.